Brothers' Squabble May Scupper Reliance, MTN Merger

The squabble between Anil Ambani, chairman of Reliance Communications and his brother, Mukesh Ambani, chairman and managing director of Reliance Industries has worsened, even as the deadline for merger talks between Reliance Communications and MTN Group of South Africa ends this week.

Reliance Industries has spurned a meeting offered by Reliance Communications, and instead threatened legal action, the Anil Ambani-led company said Monday. Reliance Industries was not available for comment.

Reliance Communications said in May that it had entered into exclusive negotiations with MTN for a "potential combination of their businesses." Reliance Industries however claimed last month that it has the right of first refusal to buy the controlling stake in Reliance Communications, which Reliance Communications denies.

The two Ambani brothers divided the business empire built by their father, after a bitter dispute.

Anil Ambani had planned to swap his controlling stake in Reliance Communications with MTN in return for a significant stake in MTN, which would still leave him in control of the merged entity, according to sources close to the situation. With Reliance Industries likely to challenge in court any plan involving transfer of the controlling equity in Reliance Communications without its consent, MTN may now balk at this arrangement, according to these sources.

MTN is expected to announce the extension of the period of the exclusive negotiations with Reliance Communications, which in the first phase was for 45 days.